Court Rules Vacation Rental Site Illegal In New York

Here's some news for travelers. If you can't afford - or don't want to pay the price for - a hotel room, maybe you've used the cheap lodging site Airbnb. If so, you have to take New York City off your list. The popular website has suffered a major setback in court. A judge in New York ruled that an Airbnb user in Manhattan violated local laws when he rented a room to an out-of-towner.

From member station WNYC, Ilya Marritz reports.

ILYA MARRITZ, BYLINE: The only difference between Nigel Warren and thousands of other New Yorkers who've occasionally rented out their homes through websites like Airbnb, is that Nigel Warren got caught. After getting a violation notice last September, Warren calculated the possible fines, figured he could be on the hook for as much as $30,000, and decided to take a chance by fighting the charges in court. This week, the decision came in the mail.

NIGEL WARREN: My immediate reaction was a mixture of relief and - you know, as to what it could have been, along with, obviously, disappointment.

MARRITZ: Warren will pay a penalty of $2,400 on behalf of his landlord. But the judge dismissed four out of five violations, including for ones for lack of sprinklers and fire alarms. On balance, Warren says...

WARREN: This is awesome. This is a far better outcome than it could have been.

MARRITZ: But on the big question, illegal occupancy, the city prevailed. And that could have consequences for Airbnb. The site has grown rapidly, as people around the world have embraced the idea of person-to-person rentals. But in many cities, these arrangements may violate local codes.

DAVID HANTMAN: We were very disappointed overall.

MARRITZ: David Hantman is Airbnb's head of Global Public Policy. By intervening on behalf of a user for the first time, the company had hoped to establish that some rentals can be done legally. That gambit failed. The city of New York did not immediately comment on the case.